Yep Cramer Said Go Long Financials 3/24/09

I know we can come back to this post 2, 3 and even 10 years later and give it probably a 100% chance he is right that some of these stocks are a good buy for the long, long, long term, however to think the banks are back and so many want in at this exact time is another story, amazing how quick sentiment on wallstreet changes. Hyping up most bank stocks after some of them are up over 50% to as much as 200% is not the way to do it.

The very people who so damaged the bank stocks, or who âplayed it smartâ by sitting on the sidelines, are scrambling to go long now that market has gained some sound footing, Cramer said Tuesday. And thereâs one sector in particular that the big money is eyeing. So investors should expect this cohort to enjoy a sudden spike in popularity.

That the Dow would give back 115 points the day after gaining nearly 500 is no surprise. Naturally, people would take profits where they could to lock in their gains. But itâs where the money will flow when it reenters the market thatâs important. And Cramer said that cash should flood right into the banks.

With Treasury Secretary Geithner announcing his plan to handle banksâ toxic assets, and Federal Reserve Chairman Ben Bernanke all but declaring that not another bank would fail on his watch, the financials are regaining the publicâs trust. Thereâs little talk of nationalization now. The mortgages that weighed so heavily on these institutionsâ books are being reworked. The asset-backed paper attached to those mortgages has finally found a viable market in which to trade. Virtually all of the banksâ problems are being solved, and Washingtonâs steady hand is behind it all.

Now the hedge funds that made billions hammering down bank stocks have to reassess their strategies. And the mutual funds that had taken a timeout to avoid losses are trying to get back in the game. That means some really big money is about to pour into the market, and Cramer thinks Morgan Stanley [MOS 45.01 0.24 (+0.54%) ], Goldman Sachs [MOS 45.01 0.24 (+0.54%) ], JPMorgan Chase [MOS 45.01 0.24 (+0.54%) ], Bank of America [MOS 45.01 0.24 (+0.54%) ], Wells Fargo [MOS 45.01 0.24 (+0.54%) ] and even Citigroup [MOS 45.01 0.24 (+0.54%) ] will be the most likely recipients.

Neither the hedgies nor the mutuals figured the turn would happen so fast. The hedge funds, in particular, assumed that Geithner would deliver the same horrible performance he did back on Feb 10, when he failed to offer any clear, viable solution to the banking mess. Banks sold off en masse after that. So why would this time be any different? Well, it was different. And Bernankeâs strong presence only added credence to Geithnerâs announcement. Now the big money is playing catch-up.

They will catch up, though. And because these guys move the markets, this trend will predominate. So be prepared to fight for shares of any of the aforementioned banks, Cramer said, from now until the end of the quarter.

I'm sure he means well, but the past yeear I've gotten totally fed up with Cramer's permabull attitude. Sector up for a few days? buybuybuy!
Stock up big for a day on no news? buybuybuy!

Some financials (or other stocks) may be a good LONG LONG term buy (ie, 5-15 yrs) for capital appreciation from these single-digit levels but the folks Cramer is targetting don't have that kind of patience, nor will they scale into a position and chose instead to go all-in at (say) $8, dump at $5 during the next major market move, and then scream how much they lost. [1]

Cramer has, from time to time, offered some useful nuggets of wisdom and/or ideas for a trade - I'm not 100% defending him, but it's just another reason that anyone looking to trade/invest needs to do their own homework and a plan to both enter and exit the trade, not just take a buybuybuy reco from a TV personality.

I think he'd do his viewers more of a service if he'd "teach" them about shorting stocks and not just being long-only. But then again, he demonizies "shorts" as something evil, so perhaps he just can't bring himself to do it.

...but then again, many of the folks watching CNBC from home looking for advice are more like the "all-in" type of market players who believe "buy, hold, and hope" is a strategy in *any* market and who invest sans a plan or any sense of the broader market environment.

[1] I've been buying battered-down GE hand over fist since it went below 14 by both averaging up and down over the past few months ... my average cost is low enough that the upside potential over the next 5-10-15 years once we get past this near-term noise is quite enticing -- especially given the global footprint and variety of GE's non-finance business. (But again, I had a plan to enter, add to, and manage the position, and am looking far down the line, and not just to the next quarter and panicking if I wasn't instantly-green.)

Right, his reliability is far less than our stock_trader. Cramer's thought was a bit random, while our guru was almost quite sure. Oh! Please don't misunderstood me, we just need to use his thought correctly, on the right side.

Quote from Red_Ink_inc:

Thanks for posting that, but who gives a crap what that ass clown thinks?